A claim exists in the literature that Newton was seen in Exchange Alley, based on a letter by the famous London publisher Jacob Tonson that mentions the possibility of meeting a “Mr. Did he also visit Exchange Alley (see figure 3 ), where financial dealings were concentrated in the early 18th century? The alley was not regarded as reputable, and reports of visits to it by the aristocracy, especially by aristocratic ladies, scandalized polite society. He had to be, since his job as master of the Mint required him to make many decisions that depended on market prices and conditions. In general, Newton was intimately familiar with commodities and finance.
The mania reached a new level of intensity in June, and Newton was swept up in the groupthink that ruled the British investing public.
But that was not known to the public before the collapse. Harsin, ed., John Law: Oeuvres complètes, 3 vols., Librairie du Recueil Sirey (1934), vol. Deringer, Calculated Values: Finance, Politics, and the Quantitative Age, Harvard U. The one they were forced to present to Parliament after the bubble burst indicated that they were planning to pay the high dividends they promised mainly out of the funds they expected to obtain from sales of shares-in other words, they had no plan beyond the misleading and overly optimistic scheme their anonymous friend or agent outlined in the Flying-Post. In fact, I can say with confidence that South Sea promoters lacked an even halfway plausible business plan. What is most remarkable is that aside from the Flying-Post article, the South Sea managers never presented the public with a business plan explaining how they would generate substantial returns for their shareholders. He kept his profits and used them to establish Guy’s Hospital, famous for its contributions to medicine in the past three centuries. Unlike Newton, Guy did not get seduced into buying back in. Significantly, Thomas Guy, an eccentric investor who became famous for making a massive fortune in the bubble, started liquidating his stake the day after the stockholders meeting. It could be that the meeting helped strengthen Newton’s skepticism and led him to decide to get out. We do not know much about what transpired at that meeting, but according to news reports, many people were in attendance for the long discussions and presentations. Those two days neatly bracket a meeting of South Sea investors on 21 April. My analysis of the available financial documents strongly suggests that Newton decided to liquidate his entire stake in the South Sea venture in the space of less than one week, on Tuesday and Saturday, 19 and 23 April.
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